Tuesday, July 4, 2017

The innovative Sheffield-Rotherham tram-train service that is scheduled to reach the borough in 2018 has seen its budgets rise significantly and was close to being cancelled altogether, a new report reveals.

First mentioned in 2009, the project will see vehicles running on both rail and tram networks, using the freight route from Rotherham and then joining the Sheffield Supertram network at Meadowhall South.

The project has been delayed a number of times as Network Rail get to grips with some of the heavy rail modifications, including power, track modifications, approvals and testing and commissioning. The service is expected to begin in Summer 2018.

Now, the National Audit Office, which scrutinises public spending for Parliament, has published a report following an investigation into the scheme.

The Department for Transport (DfT) is the client in the tram-train project, with South Yorkshire Passenger Transport Executive (SYPTE) responsible for the delivery of all of the light rail modifications, rail replacement and procurement of the vehicles. Network Rail is separately responsible to DfT to deliver the heavy rail modifications required for the project.

In May 2012, when Ministers approved the programme, the Government expected Network Rail's modification of the national rail network to cost £18.7m and the tram-train scheme to be completed by December 2015. The report reveals that by December 2016, the cost of these works had quadrupled to £75.1m. Network Rail's project is now expected to be completed in May 2018.

The delays, and lack of information from Network Rail, led to frustration at the SYPTE, which had committed some £33m on seven new vehicles to be used on the new route. The first vehicle was delivered at the end of 2015, long before the heavy rail track was ready. The new "Citylink" vehicles are due in service later this summer, but only on the existing tram network.

In addition, a £32m programme of rail replacements was already underway with parts of the track between Meadowhall and Sheffield Cathedral in line for upgrades.

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The issues came to a head in July 2016 when, following advice from the Rail Investment Board, the Permanent Secretary (Philip Rutnam) recommended to the Rail Minister (Paul Maynard) that the tram‑train project should be cancelled. The Board concluded that there is no commercial case for the project and that cancellation would free £20m from the Department's budget.

However, the board did note that cancellation would mean the majority of the £25m already spent by Network Rail would be lost and there would be "significant stakeholder and media criticism."

When clearing the project two years previously, Rutnam noted that cancellation would cause significant reputational damage.

The Minister did not accept the Board's recommendation to cancel the project due to the interest in the development of further tram-train schemes with greater potential elsewhere in the country – such as Cardiff Valleys, Glasgow Airport and Manchester.

Upon a request from the Government to find funding, in November 2016, Network Rail proposed to fund the remainder of the project, reallocating £4.6m from its renewals budget and a further £21.9m from its wider enhancements programme, to meet the costs for the heavy rail modifications that now topped an estimated £75m.

Network Rail has put the increases down to many aspects of the work being more complex than initially assumed, the condition of existing assets being worse than initially thought and extra costs relating to the requirement that the section of track could be electrified in the future. This meant the tram-train vehicles would need to be dual-voltage to be capable of running on both tram and national rail power supplies. Network Rail added to the works so that conversion between the power supplies could be done with minimal disruption.

The project has always been considered a pilot scheme, the first of its kind in the UK, and was only approved on an exceptional basis. The Government accepted the project's wider financial benefits were uncertain. The business case for the proposed scheme was based on the benefits to local transport users, such as reduced journey times. The benefit-cost ratio (BCR) of 1.0 fell into the Department for Transport's "low" value-for-money category. As costs increased, this slipped further to 0.31, in terms of the local public transport case.

The report also reveals that Stagecoach Supertram, which holds the concession to operate the tram network until 2024, has been awarded £2.5m from the Government after claiming prolongation costs and loss of revenue because of the delays to starting the service.

The delays mean that Stagecoach would be legally entitled to terminate their involvement if the service was not operating by September 2017. Bosses at SYPTE said in February that "there was no cause for concern in the project team" over Stagecoach's continued involvement.

Since 2016, Network Rail had achieved a number of significant construction milestones, including installing new track at Tinsley, the power supply and a tram-train platform at Rotherham Parkgate and work on the College Road bridge at Rotherham Central. It also changed the way it is managing the project.